2023 (4) TMI 987 - AT - Income Tax

Validity of Additions on protective basis - Substantive Addition made under the Black Money Act are sub-judice before the first appellate authority - search and seizure operation u/s.132 - HELD THAT - We have carefully perused the orders of the authorities below. Without going into the merits of the case, we are of the considered view that once additions have been made under Black Money Act the same addition cannot be made under the IT Act on the same set of facts, therefore, the deletion of the addition by the CIT(A) does not call for any interference. Hence, both the appeal by the revenue are dismissed.

Summary

Issues involved:
The judgment involves the deletion of addition made on a protective basis under section 68 of the Income-tax Act in relation to undisclosed foreign income and assets, while the assessment under section 10(3) of the Black Money Act was pending.

Details of the judgment:

*Issue 1: Deletion of addition made on protective basis*

The Appellate Tribunal ITAT Delhi considered two separate appeals by the revenue against a consolidated order of the CIT(A)-24, New Delhi for A.Y. 2013-14 and 2014-15. The common grievance in both appeals was the deletion of the addition made on a protective basis without acknowledging the ongoing assessment under the Black Money Act. The AO had initiated proceedings under the Black Money Act based on information regarding undisclosed foreign companies and assets, leading to the addition of unexplained credits in foreign bank accounts to the assessee's income under the Income-tax Act. The CIT(A) ruled in favor of the assessee, stating that the addition amounted to double taxation and should be deleted.

*Issue 2: Protective addition under Income-tax Act*

The AO had made a protective addition to the assessee's income under the Income-tax Act pending finalization of the assessment under the Black Money Act. The CIT(A) found the addition to be unjustified and deleted it, emphasizing that the same income cannot be added twice under different Acts. The Tribunal upheld the CIT(A)'s decision, noting that once additions were made under the Black Money Act, they could not be duplicated under the Income-tax Act, thereby dismissing the revenue's appeals.

Conclusion:
The Appellate Tribunal ITAT Delhi dismissed the revenue's appeals, upholding the deletion of the addition made on a protective basis under the Income-tax Act in light of the pending assessment under the Black Money Act. The Tribunal emphasized that the same income cannot be added twice under different Acts, affirming the CIT(A)'s decision in favor of the assessee.